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How to Invest in Mutual Fund

Author-Abhishek Chaurasia Date-20/04/2019

The Mutual Funds refers to a grow of money accumulated or investment by several moneyholder who aim at saving and making money through their investment. The money so created or investment is invested in various asset classes, viz. debt funds, liquid assets equities and the like. Just like gains/profits and rewards earned over the period of investment, losses are also shared by all the unitholders in equal proportion, i.e. in accordance with their proportion of contribution made by them.

Mutual Funds are registered with SEBI (Securities and Exchange Board of India) that regulates security markets prior to the collection of the funds from the unitholders. Investing in a Mutual Funds can be as simple buying or selling stocks or bonds online. Moreover, unitholders can sell out their shares whenever they want or need.

Mutual Funds is a tool to pool the money for the people who are not closely related with the industry. Even the person who are the part of the industry for many years continue to have some misconception. Investing in it will generate maximum return.

The Fund Maker aims to satisfying all your confusion regarding mutual funds doubt. I have analyse all the participants companies who provide mutual fund investment services.

Assets Management Company (AMC):

The company appointed by the mutual fund trust to handle the investments and other day-to-day activities of the schemes floated by the mutual fund. Unit-holders are investing the fund on the mutual fund shall be managed by the AMC.

Assts Under Management(AUM):

A measure of the size of business in the mutual fund industry. It is calculated for each scheme as “market to market” valuation for the scheme investment portfolio plus(+) all other assets of the scheme minus(-) liabilities of the scheme to the parties other than the unit capital plus(+) reserves of the scheme.

Balance Scheme:

A mutual fund scheme that investing in a balanced mix of debt and equity securities.

Close-end Scheme:

A mutual fund scheme that receives money from unit holders only during the New Fund Offer(NFO) period and has a fixed maturity.

Collateralised Borrowing and Lending Obligation(CBLO):

A product anticipated by Clearing Corporation of India Limited, mostly to help to non-banking corporation/entities to transact in the money market.

Continuous Offer Period:

The period that commences a day after the opening date of an open-end scheme. Sale and re-purchase prices are announced from the date of commencement of continuous offer period.


The agency appointed to have custody of the investments of mutual fund schemes.

Cut-off Timing:

The timing before which an investor’s application for investment in new units or redemption of exiting units should reach an investor Service Centre, in order to eligible for a particular day’s NAV(Net Assets Value). Application submitted after that time will be executed based on the later NAV(Net Assets Value).

Debt Scheme:

A mutual fund scheme that invests primarily in debt securities.

Dividend Option:

An option within a mutual fund scheme where a dividend is declared from time to time, subject to the availability of profits.

Dividend Payout Option:

A sub-option within Dividend Option, where the dividend that is declared is paid out to the unit-holder.

Dividend Re-investing Option:

Where the dividend is declared but it is not paid to the unit-holder, and re-investing in the same scheme. Thus, the unit-holder receives new units in the scheme in lieu of the dividend declared but not paid to the unit-holders.

Entry Load:

Entry Load= excess of the sale value over the Net Assets Value(NAV). Since entry load is not permitted under current regulations, the sale price is the same as the Nat Assets Value(NAV).

Equity Scheme:

A mutual fund scheme that invests primarily in the equity shares and related securities.

Exchange Traded Funds(ETFs):

These are uniquely structured open-end index schemes that are listed in the stock exchange.

Exit Load:

The excess of the Net Assets Value(NAV) over the Re-purchase price. It is typically quoted as a percentage to Net Assets Value and is frozen when an unitholder buys those units.

Fact Sheet:

Monthly publication brought out by AMCs to provide information about the portfolio and performance of each mutual fund scheme.

Investing in mutual fund are beneficial for the unitholders. It shall help in growing the funds of the unitholders. Investing through a mutual fund would make economic sense for an investor if her investment, over the medium to the long term,fetches a return (net of all costs,expenses and taxes) that is higher than what she would otherwise have earned by investing directly, or investing the funds in the banks. Investing in mutual funds is easy and safe process.Fund Manager would manage the funds. Fund Manager manage all the funds invested by the investor. Thrivent mutual funds are managed no-load mutual funds.

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Legal Structure of Mutual Funds in India

Author-Abhishek Chaurasia Date-15/05/2019

Who is sponsor in Mutual Fund?

For doing a project we needs a promoter, who have overall responsibility of the project. The promoter of a mutual fund is known as “sponsor”. As per the regulations, a sponsor means, “any person who, acting alone or in combination with another body corporate, establishes a mutual fund.”
A.Sponsor should have a good track record and general reputation of honesty and integrity in all business transaction.Good/sound track record means:
1.He should carrying business in financial services for a period not less than 5 years.
2.Having a record of profit, after providing for depreciation, interest and tax, of 3 years out of the immediately preceding 5 years, including the current year.
3.Having a positive net worth of all the immediately preceding 5 years.(Net worth = paid up capital plus free reserves, minus miscellaneous expenditure not written off, minus deferred revenue expenditure, minus intangible assets, minus accumulated losses).
4.In the immediately preceding year or previous year, net worth is more than the capital contribution of the sponsor in the AMC (Assets Management Company).
B.It is necessary for a sponsor that they has to contribute at least 40 per cent to the net worth of the AMC. Further more any person who holds 40 per cent or more to the net worth of the AMC is deemed to be a sponsor and should, Therefore, satisfy all the qualification prescribed for a sponsor.
C.The sponsor should be a sound minded, fit and proper person.
D.sponsor, or any of his director, or the principal officer to be employed by the mutual fund should not be convicted for any fraud involving moral persuasion or found guilty of any economic offence.
While the person meets the prescribed qualification, he is eligible to promote a mutual fund, the venture(risk bearing person) cannot be promoted unless SEBI permits it. Here Venture means, risk bearing person(e.g. sponsor). They are called venture because they might be doing something that is dangerous or unpleasant, or to risk saying something that might be criticized: He tentatively ventured the opinion that the project would be too expensive to complete, but the boss(risk bearing person) ignored him. FundManager shall manage the funds invested by the fundowners.closed-end scheme.

When will I be able to view your monthly mutual fund investment statement?


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Trusteeship Details related to Mutual Funds

Author-Abhishek Chaurasia Date-15/05/2019

Trust Deed:

A mutual fund has to be constituted in the form of a trust, created through a trust deed. The trust deed:
1.Has to contain clauses prescribed by SEBI;
2.Can not contain any clause that:
a.limits or extinguishes the obligations and liabilities of the trust with respect to the mutual fund or its unitholders; and
b.indemnifies the trustees or the AMC for the loss or damage caused to the unit holder on account of negligence or act of commission or omission;
3.Has to be duly registered under the provision of the Indian registration Act,1908; and
4.Has to be executed by the sponsor in favour of trustees named in the deed.


Indian companies are governed by the companies Act, 2013. Limited Liability Partnerships (LLPs) in India are governed by the LLP Act, 2008. Other Indian partnership are governed by the Indian Partnership Act, 1932. Similarly, mutual funds in India are governed Indian Trust Act, 1882.
Companies are real entities that are eligible to contracts in their own name. Trust, on the other hand, are national entities that are not eligible to contracts in their own name. Trusts, therefore, need to enter into contracts in the name of the trustees.
The Indian trust Act, 1882 gives two options for the constitution of the trustees:
1.An individual can be appointed as trustee. When more than one trustee is appointed, they would together constitute the board of trustees.
2.A company can be appointed as trustee. Such as trustee company, like any company under the companies Act, 2013, would have a board of directors.
Every trust has beneficiaries, namely the persons for whose benefit the trust has been created- and trustees, namely the person who are responsible for protecting the interest of beneficiaries.
When a trust a created for a mutual fund operations, the beneficiaries are the investors who invest in the various schemes promoted by the mutual fund.

Disqualification for trustees:

Given the critical role of the trustees, the regulations provide stringent disqualifications. A person can not be appointed as trustee unless she: a person of ability, integrity and standing;
2.has not be found guilty of moral turpitude; and
3.has not be convicted for any economic offence or violation of any securities laws.
A person who does not suffer from these disqualifications is eligible to become a trustee in a mutual fund. But she can be appointed as a trustee only after the prior approval of SEBI.

Rights of trustees:

The trustees have the right to obtain from the AMC, such information as they consider necessary to fulfil their obligations.
1.A majority of the trustees have a right to terminate the appointment of an AMC. Any change in the appointment of the AMC is, however, subject to the prior approval of the SEBI and the unit holders.
2.The trustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence honesty.

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Best Tips on Investing in Mutual Funds

Author- Abhishek Chaurasia Date-18/05/2019

Fast sheet:

best tips on investing in mutual funds,Monthly publication brought out by AMCs to provide information about the portfolio and performance of each mutual fund scheme.

Fixed Maturity Plan (FMP):

A close-end debt scheme that invest in debt securities whose maturity closely matches that of the scheme.

GARP Stocks:

Growth stock that are the available at a reasonable price.


Invest in Government securities. Invest in government securities are purely secured from other investment instruments.

Gilt schemes:

A mutual fund investment scheme that invest primarily in gold and related securities.

Growth Option:

An option within a mutual fund investment scheme where no dividend is declared.

Growth Scheme:

A mutual fund investment scheme whose main objective to generate maximum return for the unit-holder through a portfolio that is oriented to growth assets like equity. Invest in grow scheme will improve your money and provides you higher return.

Growth Stocks:

Growth stocks means, the share of the companies whose earning are rising faster than the economy.

Hybrid Scheme:

A mutual fund investment scheme that invest significant amount in more than one assets class.

Inception Date:

The date of allotment of units after the New Fund Offer (NFO).

Income Stocks:

Share of the companies that offer an attractive return in the form of dividend yield.

Index Scheme:

Schemes that maintain a portfolio which mirrors prespecified index, e.g. S&P BSE Sensex or CNX Nifty.

Interval Fund:

A mutual fund scheme that is essentially close-end, but become open-end during prespecified time period, e.g. first 15 days of every quarter.

Interval period:

The period between two successive transaction periods in an interval fund is called interval period.

Liquid Schemes:

A mutual fund debt scheme that invest only in short-term debt securities.


Amount charged beyond the NAV for transactions that unit-holders have with the scheme. See also “Entry Load” and “Exit Load”.

Entry Load:

The excess of the sell price over the Net Assets Value (NAV). Since entry load is not permitted under current regulation, the sale price is same as the Net Assets Value (NAV).

Exit Load:

The excess of the Net Assets Value (NAV) over the re-purchase price. It is typically quoted as a percentage and is frozen when an unitholder buys those units.

Market to Market (MTM):

Barring a few exceptional situations, all securities in the portfolio of a mutual fund scheme are valued in the market price in order to determine the NAV. Such valuation is called “Market to Market.”

Money Market:

The segment of the debt market where short-term debt securities (Up to 1 year maturity) are traded.

Monthly income plan (MIP):

A mutual fund scheme that seeks to provide a monthly income by investing primarily in debt securities, but with a small exposer to equity. The income is however is not guaranteed.

Mutual Fund:

The trust that floats various mutual fund schemes using the services of the Assets Management Company (AMC).

Mutual Fund Scheme:

A mutual fund scheme is a investment vehicle in which unit-holder invest. Each mutual fund scheme has a dedicated investment portfolio whose gains or losses belong to the unit-holder in that scheme.

Net Assets Value (NAV):

The value of the each unit of the scheme. This is determined based on “Market to market” valuation.

New Fund Offer (NFO):

When mutual fund schemes are offered to fundowner at large for the first time, it is called New Fund Offer (NFO).

Open-end Scheme:

A mutual fund scheme that is open for investment and redemption on any working day. Such scheme do not have a fixed maturity.

Real Estate Investment Trust (REIT):

A vehicle for fundowners to take exposer to real estate which is structured differently from a Real Estate Mutual fund scheme.

Real Estate Mutual Fund Scheme:

AQ mutual fund scheme that invests primarily invest in real-estate exposers.

Registrar & Transfer Agent (RTA):

The agency that is responsible for maintaining records of the unit-holders and handling corporate actions such as issue of bonus units and dividends.

Re-purchase price:

The price at which an open-end scheme is prepared to buy its units from an unitholder.

Sale Price:

The price at which an open-end scheme sells its units to an unitholder. Under current regulation, it is same as Net Assets Value.


The person who constitutes the mutual fund invest trust and promotes the Assets Management Company (AMC).

Systematic Investment Plan (SIP):

An approach to investing, where constant amount are invested in a mutual fund scheme periodically (mostly, every month).

Systematic Transfer Plan (STP):

An approach to mutual fund investing, where constant amount are transferred from one scheme to another scheme periodically (mostly, every month). It is effectively a combination of the systematic withdrawal plan in the scheme from which money is transferred, and a Systematic Investment Plan in the scheme into which money is transferred.

Systematic Withdrawal Plan (SWP):

An approach to dis-investing, where constant amount are realised from a mutual fund scheme periodically (mostly, every month).Also Read:exchange-traded funds, dollar-cost averaging, target-date funds.


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